SMUD to Buy East Bay Muni?s Hydro

The Sacramento Municipal Utility District?s board of directors on June 16 approved two renewable power purchase agreements with the East Bay Municipal Utility District to supply about 40 MW from EBMUD?s two hydroelectric projects in the Sierra Nevada. The 10-year contracts will move the district closer to achieving its renewables portfolio standard goals of supplying 10 percent of its electricity needs with renewables by 2006 and 20 percent by 2011, said SMUD spokesperson Dace Udris. The green supply ?is also peaking generation, so it will help with our summer peak load,? she added. The agreements are the first power supply contracts SMUD has signed with its Oakland-based sister muni. EBMUD will supply 30 MW from its Pardee hydroelectric generating facility at Pardee Reservoir, the muni?s main drinking water source, and 9.9 MW from the downstream Comanche hydroelectric project on the Mokelumne River. Using hydro to meet renewables goals is a bone of contention among environmentalists, politicians, investor-owned utilities, and munis. Investor-owned utilities are prevented from counting hydro above 30 MW in their renewables portfolios. The Legislature considered a bill last year that would impose the same requirement on munis, but it was defeated after strenuous public power agency opposition. Some munis, however, are attempting to voluntarily meet the same goals mandated for investor-owned utilities. SMUD would not disclose the terms or prices for the EBMUD power contracts so as not to influence the muni?s ongoing negotiations with other renewables suppliers, Udris said. SMUD officials estimated that the district will need about 2,250 GWh a year by the end of 2011 to serve residential and commercial customers enrolled in its Greenergy pricing program. Those customers pay a premium on their monthly bills for SMUD to purchase renewable power on their behalf. EBMUD is exclusively a water district and does not provide any electric service to its customers in Alameda County, which are served by Pacific Gas & Electric. EBMUD sold all of its generation to PG&E until 1999, when the muni negotiated a termination of its power-purchase contract because it could make more money selling its hydropower in the wholesale market. SMUD will pay real-time market prices posted by Dow Jones, plus a green-attribute fee of $4.75/MWh for the power, EBMUD spokesperson Charles Hardy said. ?The fact that they?re a municipal utility is not a bad thing either,? he said. ?We?re selling from one public agency to another and not seeking profits.? In other action, SMUD?s board approved $25 million of additional funding needed to complete construction of the Cosumnes power plant in Sacramento by next spring, increasing the project?s total budget to $415 million from $390 million. The plant originally was scheduled to come on line this September but was held up after SMUD fired and then sued its general contractor Fru-Con Construction in February. The district alleged faulty construction and failure to meet work deadlines. The 500 MW combined-cycle natural gas?fired power plant being built next to the decommissioned Rancho Seco nuclear power plant is 80 percent complete. When completed, the Cosumnes power plant will increase SMUD?s current 1,500 MW generating capacity by 30 percent. SMUD?s board held a closed-session meeting June 14 on the litigation. SMUD signed a $108 million contract with Fru-Con in 2003 after the St. Louis?based construction company submitted the lowest-priced bid for Cosumnes. SMUD paid Fru-Con $80 million before terminating the contract in February because of a payment dispute, missed deadlines, and allegedly flawed work ( Circuit , February 18, 2005). The muni then sued Fru-Con in Sacramento Superior Court, claiming breach of contract and negligence for substandard work. Fru-Con countersued SMUD for $20 million in damages in the U.S. District Court for the Eastern District of California for wrongful termination and breach of contract, blaming SMUD and Utility Engineers, which designed the plant, for the delays, design flaws, and cost overruns. SMUD is also named as a third party in a separate lawsuit filed by Fru-Con?s subcontractor Foundation Constructors in Sacramento Superior Court against the contractor for failing to pay the subcontractor its bill for driving pilings in early 2004. SMUD also sued Fru-Con?s subcontractor Tichard in Sacramento Superior Court for exceeding the boundaries of the project site and dredging and filling protected wetlands. SMUD is negotiating with the Army Corps of Engineers to resolve the problem and has offered to buy additional wetlands to mitigate for the loss, said Steve Cohn, SMUD?s assistant counsel. ?If we had allowed the project to go on, it could have presented major problems for us to operate before next summer,? Cohn said. While the litigation winds its way through the courts, SMUD has assumed management of the project as its own general contractor.

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SMUD to Buy East Bay Muni?s Hydro

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